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Australians who lost income or were unable to access critical services during last week’s Telstra outage could be entitled to compensation of up to $100,000, but the industry ombudsman has called on the company to offer payments across the board so customers don’t have to make individual claims.
The nation’s largest telecom company also faces the specter of a bankruptcy class action, as well as pressure from consumer advocates to fix what they call the country’s “woefully inadequate” workers’ compensation laws, according to a network of law firms.
Telstra CEO Vicky Brady addressed the media on Friday after returning from annual leave to deal with the outage.Louise Kennerley
Wednesday’s power outage left hundreds of people unable to use Triple Zero services, disrupted rail services in Victoria and New South Wales and brought payment systems to a standstill across the country.
On Thursday, the outage escalated into a secondary outage that continued to cause Triple Zero connection errors and led to the suspension of V/Line regional train services in Victoria for a second day. The headline said for the first time that the outage was likely caused by a server that reached the end of support nearly a decade ago and has never been replaced, despite new devices costing less than $30,000.
Haider Shkara, director of the Justice Network, an alliance of 11 boutique law firms, said the blackout was much more than just an inconvenience for those who rely on connections to make a living. He said the sheer number of people affected has opened the door to coordinated lawsuits. “There is a possibility of a class action lawsuit because so many people were affected by the power outages,” he said in the headline.
However, compensation is not automatic and clients must prove they suffered actual damage, he said.
Telstra, Optus and other telecommunications companies, in their contracts, largely exclude liability for indirect, economic or consequential losses caused by network failures. The main exception is Triple Zero failures, which carry fines of up to $30 million per violation. This exception means that a business chasing lost profits may face not only a burden of proof, but also a contractual barrier, although consumer protection law obligations may apply regardless of what the contract says.
A case where someone failed to contact Triple Zero in an actual emergency and was injured as a result would be a separate and much more serious legal issue, likely to be dealt with in court rather than through an ombudsman, and would suffer damages well in excess of its $100,000 cap.
Police are investigating the death of a man in regional South Australia on the day of the blackout and a report is due to be passed on to the coroner, although the death is not linked to the crash.
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Telecoms industry ombudsman Cynthia Gebert said the true extent was not yet clear as customers should first try to resolve a complaint directly with their telecoms company.
The Ombudsman can hear complaints from individual consumers, as well as small businesses and non-profit organizations, and can award compensation of up to $100,000 for financial loss and up to $1,500 for unusual stress or inconvenience. Gebert called on Telstra to consider standard payments to victims.
“When an outage affects multiple customers, we recommend that telecommunications companies consider establishing a standard compensation offer,” she said. “It is also important for telcos to consider the individual circumstances of customers who have experienced a more significant impact beyond what the standard offer would provide.”
Australian Consumer Network chief executive Carol Bennett warned Telstra against a token response: “Telstra needs to be proactive and offer customers a real, generous compensation package,” Bennett said. “They should not provide a meaningless gesture such as additional data that was used previously and which falls significantly short of what people should receive after losing access to essential services, including Triple Zero.”
Bennett said the burden of proof on clients was unreasonable. “First, consumers have no clear guarantees about network reliability, and many are now being asked to prove financial loss from an outage they could not have prevented or predicted,” she said.
“Self-regulation doesn’t work.”
Carol Bennett, Executive Director of the Australian Communications Action Network.Alex Ellinghausen
She said the fines and compensation regime should be modernized to reflect the true cost of power outages.
Telstra did not say how many customers had applied for compensation, but said it had published forms for consumers and small businesses to claim payments, including a loss of business claim form for small operators. Affected customers must file a complaint themselves, through the telecommunications company’s online form or, for small businesses, by calling a dedicated line. Telstra said every effort will be made to review and resolve complaints as quickly as possible.
Telstra chief executive Vicky Brady apologized again in an email to customers on Monday. She said Telstra had invested heavily in the resilience of its network and would conduct a full investigation, and warned customers to be wary of scammers posing as Telstra employees.
The telecoms company also faces a formal investigation by the Australian Communications and Media Authority into whether it has complied with its obligations, which carries civil penalties of up to $30 million per breach.
The Senate inquiry into the outage, the third inquiry held into the outage, on Friday will examine whether any underinvestment in technology by Telstra contributed to the outage.
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David Swan is technology editor of The Age and the Sydney Morning Herald. He was previously technical editor of an Australian newspaper.Connect via X or e-mail.